Trump formally calls for NAFTA negotiations

President Donald Trump's administration formally notified Congress today of its intent to renegotiate the North American Free Trade Agreement.

Detroit Free Press

WASHINGTON — President Donald Trump's administration formally notified Congress today of its intent to renegotiate the North American Free Trade Agreement, taking the first step toward fulfilling a promise to make a long-standing trade deal particularly important for American automakers pay off in terms of U.S. jobs and exports.

The long-expected move was met with calls from Ford to address currency manipulation in all trade deals and a statement from American Automotive Policy Council President Matt Blunt defending the 25-year-old trade deal as having "helped boost the global competitiveness of the U.S. auto industry."

A man walks past the nearly deserted construction site as workers shut down operations and remove ...more

A man walks past the nearly deserted construction site as workers shut down operations and remove equipment a day after Ford announced the cancellation of plans to build a $1.6 billion auto manufacturing plant on the site in Villa de Reyes, outside San Luis Potosi, Mexico, Wednesday, Jan. 4, 2017.

"We support modernizing the agreement in ways that will further strengthen North America as a manufacturing powerhouse, stimulate economic growth and drive job creation," said Blunt, whose group represents Ford, General Motors and Fiat Chrysler Automobiles.

While Democrats and some Midwest Republicans have long called for changes to NAFTA — with many blaming manufacturing losses across the U.S. to jobs they say have shifted to lower-wage countries like Mexico aided by NAFTA — there have been concerns that wholesale changes or a withdrawal, as Trump, has threatened, could hurt significant auto investments in Mexico, raise prices or set off a trade war.

The notice came a week after the Senate confirmation of new U.S. Trade Representative Robert Lighthizer, which was expected to signal the administration's move on NAFTA. It also comes amid the fallout from Trump's firing of FBI Director James Comey and an investigation into Russian involvement in the 2016 election.

From the beginning of his campaign for president, Trump targeted automakers — specifically Ford — for plans to expand operations in Mexico and has threatened to tear up NAFTA or charge high tariffs on automakers or others who expand operations oversees with an eye toward importing products back into the U.S.

Ford Motor Company CEO, Mark Fields (R), General Motors CEO, Mary Barra, (L), and Fiat Chrysler CEO, Sergio Marchionne (C), speak to the media after attending a breakfast with President Donald Trump at the White House on January 24, 2017 in Washington, DC.

Mark Wilson, Getty Images

Required notices sent to Congress today — setting off a 90-day period before negotiations can formally begin — made no mention of those promises or the threat to withdraw from NAFTA, with Lighthizer saying more simply that "Many chapters (of the agreement) are outdated and do not reflect modern standards" and that "effective implementation and aggressive enforcement" of agreements by Mexico and Canada are needed.

Negotiations wouldn't begin any earlier than Aug. 16 under the rules.

“Today, President Trump fulfilled one of his key promises to the American people. For years, politicians have called for the renegotiation of this agreement, but President Trump is the first to follow through,” Lighthizer said in a statement, adding that his office "will now continue consultations with Congress and American stakeholders to create an agreement that advances the interests of America’s workers, farmers, ranchers and businesses.”

House Speaker Paul Ryan said he welcomed the administration's "effort to improve and update NAFTA for the 21st Century economy."

"The United States values its strong economic ties with Mexico and Canada, and these negotiations should work to enhance our trilateral trading relationship. Congress looks forward to working hand-in-hand with the Trump administration to achieve the best deal possible for American workers and our economy," he said.

Democrats, too — who have long heard from angry workers that NAFTA was draining jobs and resources away from the U.S., although the evidence of that across the country is clearly mixed — also indicated they were hoping for the best from the negotiations.

“Since NAFTA passed, too many workers in Michigan and across the country have seen their jobs shipped overseas, their wages drop in real terms and their families lose hope," said U.S. Rep. Debbie Dingell, D-Dearborn. "We now have an opportunity to renegotiate this failed trade agreement, but it is critical that we do so in a way that puts working families first."

Some, however, said Trump was already failing to meet responsibilities to work in good faith with Congress on changes to the deal.

“Unfortunately, in meetings (with Congress) to date, the administration has evaded questions about a core problem with NAFTA: a wholly deficient labor regime in Mexico that has kept wages low and workers without the rights to change the system," said U.S. Rep. Sander Levin, D-Royal Oak.

Democrats and union members have long argued that the problem with NAFTA and other trade deals is a failure to require enforcement of labor standards that would increase wages and regulations in partner countries, protecting jobs in the U.S.

"Instead of being clear that Mexico will be required to change their laws and bring their practices into compliance with internationally recognized labor standards, they have stated that these are ‘sensitive’ issues," said Levin.

“Donald Trump ran for president as the world’s best negotiator. Here’s his chance to actually deliver," said U.S. Rep. Dan Kildee, D-Flint Township. "If we’re going to get it right, American trade policy must be fair and have the support of Democrats and Republicans. My constituents deserve trade policies that put American workers first."

Michigan Republicans in Congress, meanwhile, largely greeted the news that Trump — the head of their party — will renegotiate NAFTA with silence. None put out a news release or statement on the notification to Congress.

Automotive executives have been treading carefully in recent months, with CEOs of the Detroit Three meeting with Trump several times at the White House. Automakers have said in general they support "modernizing" NAFTA with the hope that Trump's other pro-business policies on initiatives like corporate tax reform will counterbalance any steeper tariffs that could come from an overhaul of NAFTA.

"The North American Free Trade Agreement has been a success both for the country and the auto industry," said John Bozzella, president and CEO of Global Automakers, a lobbying group that represents the U.S. operations of Asian and European automakers. "We recognize the need to modernize this agreement to address technological changes to better meet new market demands."

Automakers also have opposed proposals for a Border Adjustment Tax, which would impose taxes on goods imported into the U.S., and are wary of steep tariffs on goods from Mexico, where nearly all automakers produce cars and trucks sold in the U.S.

Trump won the presidency in a stunning upset by winning across the Rust Belt in Michigan, Ohio, Pennsylvania and Wisconsin, becoming the first Republican candidate to do so since Ronald Reagan.

Negotiations over NAFTA could be rocky, however, given Trump's penchant for sudden, extreme statements — given voice publicly on Twitter — and his repeated threat to withdraw altogether from the trade deal if he doesn't get what he wants.

Late last month, Trump abruptly changed course after again threatening a withdrawal as he approached his 100th day in office, saying he did so after getting calls from Mexican President Pena Nieto and Canadian Prime Minister Justin Trudeau that they "renegotiate NAFTA rather than terminate."

"I agreed ... subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good — deal very possible!" Trump wrote on Twitter. He has also pulled the U.S. out of the proposed Trans-Pacific Partnership and generally talked down multinational trade deals in favor of bilateral deals.

Trump's aides, according to a report in the Washington publication Politico, had earlier been said to be drafting an executive order to withdraw from NAFTA — a threat that quickly drew fire from members of Congress including Republican U.S. Sens. John McCain of Arizona and Ben Sasse of Nebraska.

Even though some members of Congress and others have said a withdrawal from NAFTA could have widespread negative effects on the economy, Trump has continued to refer to it as "catastrophic." In recent months, Trump has announced tariffs on softwood lumber from Canada and criticized policies in that country which he has said have hurt U.S. dairy producers.

If Trump decided to withdraw from NAFTA, it would require six months' notice under the terms of the 1992 agreement and other related trade legislation.

Contact Todd Spangler: 703-854-8947 or tspangler@freepress.com. Follow him on Twitter at @tsspangler. Auto writer Brent Snavely and USA TODAY contributed to this report.